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Between 2006 and 2020, the world is expected to reach a peak in oil production where world demand for oil resources will be greater than the world's available oil supplies. Learn about oil and natural gas depletion and what that means for the global economy and our way of life in the United States.

Friday, December 30, 2005

Long gas lines are potent symbol of U.S. occupation

I've received some resistance when talking to friends and family about how the U.S. through corporations or military means target countries rich with natural resources and exploit those resources so that Americans benefit and the countries and their people suffer. There is no reason that Iraqis should be paying high prices for oil when they are endowed with one of the biggest remaining oil reserves on the planet, while Americans, who have used up all of their oil, consume cheap oil limitlessly.

By Brian Conley, Updated Dec 10, 2005

BAGHDAD (IPS/GIN) - Although Iraq has the second-largest oil deposits in the world, Iraqis are forced to sit in excruciatingly long lines to buy gasoline and kerosene. Before the recent war in Iraq, the sanctions decreased access to many resources, but gas was still plentiful and affordable. That changed with the U.S.-led 2003 invasion.

After the fall of Saddam’s regime in April 2003, the security situation in Iraq swiftly deteriorated. In addition to the looting of the Iraqi National Museum and ministry buildings, the pipelines carrying Iraq’s oil were sabotaged more than 200 times. The recurring acts of sabotage have greatly depleted Iraq’s local supplies of oil. Much of the oil that is produced is controlled by foreign companies contracted to manage the oil early in the war.

Iraqis believe that the fuel produced in Iraq is exported, and the fuel available for use by Iraqis is imported from Kuwait or other oil-producing nations in the region.

The shortage has dramatically changed daily life in Iraq. Baghdad residents may only drive every other day, depending on their license plate numbers. Some of the wealthier families own two cars with different plate numbers, enabling them to drive any day.

Drivers can only buy fuel on the days they can drive. This restriction, combined with the long gas lines, means that some people can only drive every third or fifth day. The even and odd restriction, and the long gas queues, have had a huge, negative impact on the employment situation.

Drivers are some of the only Iraqis still able to find work in Baghdad. Having lost their previous professional positions or the ability to pursue their education, many members of Iraq’s middle class have pressed their mid-range to luxury vehicles into transporting those lucky enough to have found gainful employment.

Kerosene has also become scarce and expensive. The failing electricity grid has created a large market for kerosene-powered generators. The gas shortages and the long lines mean some families cannot obtain gas to keep their lights on or their houses warm in the winter.

The new Iraqi constitution, passed recently in a historic referendum, has paved the way for increased privatization of Iraq’s oil fields and outsourcing their vast wealth to foreign multinational corporations. As a result, it appears Iraqis will continue to wait in long lines for small amounts of expensive fuel.

Oil Prices Seen 40 Percent Higher for '05

By BRAD FOSS, AP Business Writer

Many analysts believe the average price of oil will be below $60 in 2006, though not by much as U.S. and Chinese economic growth continues and hawkish members of OPEC, such as Venezuela and Iran, express growing interest in a production cut as early as the first quarter.

"Because of China, oil is never going to go to the $18 to $22 level again in our lifetime," said Mike Fitzpatrick, a broker at Fimat USA in New York. "But it certainly doesn't have to be $60."

Fitzpatrick believes average oil prices will be closer to $50 a barrel in 2006, an outlook predicated on a slowdown in economic growth in the second half of the year — because of high energy prices. "At some point, this has to have a deleterious economic effect," said Fitzpatrick, whose price outlook is more bearish than many of his peers.

One thing that all oil analysts agree on is that the world's largest petroleum producers are pumping almost as much as they can, with little excess production capacity available in the event of a prolonged supply disruption. The mere threat of lost output, whether because of geopolitical strife or a natural diaster, will be enough to keep the market on edge in 2006.

"It won't take much to up the price again next year," said London-based oil analyst John Hall of John Hall Associates.

"My guess is that OPEC is quote committed to holding up the price" at present levels, Hall said.

Hall also focused on Iraq, Iran and Nigeria as potential problem countries, saying output snags and increasing political tensions could drive prices upward.

We're in a post-Christmas lull, but "things will start to warm up when OPEC ministers start talking about what to do," ahead of their January meeting, Hall said. Even now, "they're all saying the same thing — 'we're going to cut.'"

Thursday, December 29, 2005

What Is Peak Oil Anyways?

I figured before I started posting a whole bunch of articles surrounding the issue of a coming global oil peak, I should probably try to explain what it is. I've been amazed (but not really, because I do live in the United States - "the greatest country in the world") by the complete ignorance that people have on this subject. Most people haven't heard of it, and to be honest, I hadn't heard of it either before I began reading about it after Hurricane Katrina. But fortunately, I've been equally amazed as to the resources already available on the subject and the tons of thoughtful people who are already trying to get the word out. Here's the best summarized description I found on the subject of peak oil.

What is Peak Oil?Peak Oil is the simplest label for the problem of energy resource depletion, or more specifically, the peak in global oil production. Oil is a finite, non-renewable resource, one that has powered phenomenal economic and population growth over the last century and a half. The rate of oil 'production,' meaning extraction and refining (currently about 83 million barrels/day), has grown in most years over the last century, but once we go through the halfway point of all reserves, production becomes ever more likely to decline, hence 'peak'. Peak Oil means not 'running out of oil', but 'running out of cheap oil'. For societies leveraged on ever increasing amounts of cheap oil, the consequences may be dire. Without significant successful cultural reform, economic and social decline seems inevitable.

Why does oil peak? Why doesn't it suddenly run out?Oil companies have, naturally enough, extracted the easier-to-reach, cheap oil first. The oil pumped first was on land, near the surface, under pressure, light and 'sweet' (meaning low sulfur content) and therefore easy to refine into gasoline. The remaining oil, sometimes off shore, far from markets, in smaller fields, or of lesser quality, takes ever more money and energy to extract and refine. Under these conditions, the rate of extraction inevitably drops. Furthermore, all oil fields eventually reach a point where they become economically, and energetically, no longer viable. If it takes the energy of a barrel of oil to extract a barrel of oil, then further extraction is pointless.

Where does the idea of oil peak come from?In the 1950s a US geologist working for Shell, M. King Hubbert, noticed that oil discoveries graphed over time, tended to follow a bell shape curve. He posited that the rate of oil production would follow a similar curve, now known as the Hubbert Curve (see figure). In 1956 Hubbert predicted that production from the US lower 48 states would peak in 1970. Shell tried to pressure Hubbert into not making his projections public, but the notoriously stubborn Hubbert went ahead and released them. In anycase, most people inside and outside the industry quickly dismissed Hubbert's predictions. In 1970 US oil producers had never produced as much, and Hubbert's predictions were a fading memory. But Hubbert was right, US continental oil production did peak in 1970/71, although it was not widely recognized for several years, only with the benefit of hindsight.

So when will oil peak globally?Hubbert went on to predict a global oil peak for around 1995. He may have been close to the mark except that the oil shocks of the 1970s slowed our use of oil. As the following figure shows, global oil discovery peaked in the 1960s. Since the mid-1980s, oil companies have been finding less oil than we have been consuming. Source: peakoil.ie

Of the 65 largest oil producing countries in the world, up to 54 have past their peak of production and are now in decline, including the USA (in 1970/71) and the North Sea (in 2001). Hubbert's methods, and variations on them, have been used to make various projections about the global oil peak, with results ranging from 'already peaked', to the very optimistic 2035. Many of the official sources of data used to model oil peak such as OPEC figures, oil company reports, and the USGS discovery projections, upon which the international energy agencies base their own reports, can be shown to be very unreliable. Several notable scientists have attempted independent studies, most notably Colin Campbell and the Association for the Study of Peak Oil and Gas (ASPO). Source: peakoil.ie

ASPO's latest model suggests that 'regular' oil peaked in 2004. If heavy oil, deepwater, polar and natural gas liquids are considered, the oil peak is projected for around 2010. Combined oil and gas, as shown above, are expected to also peak around 2010. Other researchers such as Kenneth Deffeyes and A. M. Samsam Bakhtiari have produced models with similar or even earlier projected dates for oil peak. Precise predictions are difficult as much secrecy shrouds important oil and gas data.

What does Peak Oil mean for our societies?Our industrial societies and our financial systems were built on the assumption of continual growth – growth based on ever more readily available cheap fossil fuels. Oil in particular is the most convenient and multi-purposed of these fossil fuels. Oil currently accounts for about 43% of the world's total fuel consumption [PDF], and 95% of global energy used for transportation [PDF]. Oil is so important that the peak will have vast implications across the realms of geopolitics, lifestyles, agriculture and economic stability. Significantly, for every one joule of food consumed in the United States, around 10 joules of fossil fuel energy have been used to produce it.

The End of Oil: Interview with Paul Roberts Part I

MJ.com: Is the price of gasoline, and energy policy in general, more important as an election issue now than in previous years?

PR: We’re going to find that out. Certainly I thought -- and I think a lot of other observers thought, going in six months ago, that Kerry would be able to hammer the Bush administration on gasoline prices, but the fact is that as soon as you raise the issue, you have to present a solution. Kerry knows that presidents are very limited in what they can do. It really requires a long-term policy, and Kerry is in the process of working on it, but he recognizes that it’s complex. As much as Kerry would like to give a bumper-sticker answer, he knows that, really, you need a comprehensive energy policy. The Bush administration -- as much as I happen disagree with the way they approached it -- they did have a comprehensive energy policy. They came in and said: “We’re not going to preserve. We’re not going to waste our time thinking too much about the alternatives. Efficiency is great, but we’re not going to bet the farm on it. What we’re going to do is to increase production -- past administrations have let the country down because they have not emphasized production. We have not been drilling as much as we should; we aren’t building enough refineries and power plants; and we have not been as careful in building up relationships with oil-supplies -- not just the Middle East, but diversifying our relationships. We need people outside the Middle East, so therefore, we’re going to be working with Africa, the Caspian, and Russia.”

MJ.com: How does Iraq figure into this vision?

PR: Iraq is the centerpiece [of it]. It automatically marks you as a leftist-green-Nader-anarchist in Seattle if you say that it’s a war for oil. But the problem is that it’s been left in this very narrow political context. That's to say, if you say it’s a war for oil, that means that you're against Bush, and if you claim that it’s a war to promote democracy, than you’re for Bush. But you have to give it a much wider context and say that: given that the U.S. uses as much as oil as it does and has done nothing to reduce its demand and given that the global economy on which U.S. power depends entirely; given that global economy depends entirely on oil, mostly from Middle East, the U.S. has no choice but to be intimately connected with Middle Eastern policy, and to intervene -- either diplomatically or economically or worse -- if the stability of the region is threatened. And that this has been the case under any administration. The U.S. has not cut its demand, so it must involve itself in the affairs of its suppliers of oil. But it's been allowed to be staged so narrowly focused that as soon as you raise the war-for-oil rhetoric, you are unpatriotic. But the fact is that the issue is much larger than that and always has been.

MJ.com: With the occupation and the insurgency, there have been attacks on oil terminals. You can make the argument that the Iraq war hasn't stabilized the Middle East.

PR: No, I think it has done just the opposite. Right now we have attacks on oil installations in Saudi Arabia, attacks on oil tankers, and oil-loading ports, such that the oil market now assigns what it calls a “war premium” to the price of oil. It’s between $5 and $10 dollars a barrel. So the market thinks that it hasn’t worked. I happen to think that this war premium is overstated. The contention there is that were it not for the instability in the Middle East, the price of oil would be much, much lower. And I think that although it would be somewhat lower, there is a fundamental tightness in the oil market -- it’s not simply driven by politics. The market is aware that we use 80 million barrels of oil everyday and that our maximum production at this point is 82.5 million barrels of oil a day. So it’s two and a half million barrels of margin -- that’s our cushion, what we call our spare capacity. Most of that margin is in the Middle East, particularly in Saudi Arabia and Kuwait. What that means is that if Venezuela -- which produces two and a half million barrels of oil a day -- were to fall into civil unrest, as it did a year and a half ago and let’s say it took off its oil production, which happened -- Venezuela basically shut down its exports a year and half ago. The market simply lost that oil. Saudi Arabia and Kuwait were able to pump up their production and fill that gap before the prices went too high. Now if that happened, that would pretty much tap out all the spare capacity we’ve been talking about. There would no more room for accidents. There would be no more room for disruptions. What if production in Iraq fell because the chaos continued to grow and oil companies stopped wanting to send their people there? What if Saudi Arabia has some sort of political upheaval?

Tuesday, December 27, 2005

Farmers Dig Deep To Save on Fuel Costs

If you think it's expensive to fill up the family minivan, consider the plight of farmers. A tractor uses up to ten gallons of diesel every hour and often runs from dawn to dusk.

In a farm field near Longmont, a tractor pulls a contraption called a "Strip Tiller" through the stubble of last year's corn crop. Three generations of farmers watch the demonstration, organized by the Longmont Conservation District.

"I just think it's a good opportunity to see if it works, and see if we can save some money," says Mike Litzenberger, a local farmer.

The machine cuts a foot-deep groove into the soil where sugar beets will be planted next spring.This method requires only two trips across the field, instead of the six or seven required by conventional farming techniques. This can save a typical farmer thousands of dollars in fuel costs.

"It's about doubled in the last year or so. It should be a tremendous savings in fuel," Longmont Conservation District's Bill Haselbush says.

The main reason the Soil Conservation Service is promoting the idea, however, is to reduce soil erosion. Instead of turning the soil over with a plow and discing it until it's practically powder, this method leaves stubble in the field and that should help hold the soil in place.

"A lot of times in the spring you'll see topsoil blowing. With this strip till machine it should eliminate that," Haselbush adds.

They hope this tilling technique will also conserve water used for irrigation. Tim Carney, also of the Longmont Conservation District, says "By having crop residue on the surface that acts as a mulch, it may help reduce the need for that first irrigation in the spring. And there's less potential for soil erosion as well."

The real test, however, comes next fall when the crop is harvested. Farmers will weigh the harvest from these test plots and see how it measures up to conventional farming.The Soil Conservation District is testing the low-till technique on eight farms in northern Colorado. The demonstration will last two years.

Thursday, December 22, 2005

Price hikes on tap for 2006: Heating costs: 20% to 40% more

From homeowners' insurance to home heaters, the sum of your expenses is likely to grow. December 8, 2005: 8:09 AM EST

Warm temperatures stuck around longer than usual this fall, but not long enough to eliminate what are anticipated to be the biggest increases in heating costs in five years.

On average, if you use natural gas to heat your home, you can expect to spend $281 (or about 38 percent) more than you did last year, according to the latest data from the Energy Information Administration. If heating oil is what keeps you warm, you'll pay about $255 (or 21.3 percent) more, while propane-generated heat will run you $167 (or 15.2 percent) more on average.

If you use electric heat, you'll pay $46 (or 6.5 percent) more.But, the EIA notes, what you eventually pay will depend on local weather conditions, the size and efficiency of your home and heating equipment, not to mention who wins the thermostat wars at night

Hybrids - Solution? Denial? or One Step Towards Conservation?

I had a conversation with my mom last night about energy prices going up the future and she's been hearing that hybrids are the way to go -- everyone must buy hybrids. I'm happy that people are looking into getting greater miles per gallon but I still think people are missing the point. The US (and the rest of the world) are going to have to undergo a complete crash course in conservation to get off oil. I don't doubt that many Americans will do anything in their power to be able to keep their cars and keep on motoring, but I would have to argue that particular sentiment is a form of denial.

Hybrids get better mileage in ideal conditions and the savings are limited. Also, the current price of hybrids prohibit the majority of consumers from obtaining one if even if the prices came down, many people would still not be able to afford to trade in their current car to purchase a hybrid. Our government has the power to incentivize conservation efforts, such as offering tax breaks on hybrid vehicles where more people can afford them, or taxing the use of gas guzzling mileage inefficient vehicles. In San Franciscco, new measures have been put in where hybrid vehicle owners can ride in the HOV lane at any time with one person in the vehicle.

So while i think the increase in demand for demand for hybrids shows the beginnings of American consumers realizing that we can't continue to consume oil like there is no tomorrow, hybrids only offer one small, tiny step towards kicking our oil addicition. American's are being sheltered from the far reaching consequences of our oil addiction and we're behind in the game. Don't you think it's interesting that Japanese and other foreign car dealers have emphasized fuel efficieny for years and now GM and other American manufacturers are struggling (GM is laying off thousands of workers, losing market share, and possibly close to filing for bankruptcy) to get on the hybrid bandwagon? Don't you find it interesting that Honda is not only producing hybrid vehicles but also diversifying by planning to mass produce solar cells by 2007. It's kind of like the rest of the world knows something we as Americans don't know...or at the least, don't want to acknowledge.Honda CEO says hybrids must become less expensive

Automakers will to have to slash the cost of developing gas-electric hybrid vehicles compared with conventional models before they truly catch on with the public, Honda Motor CEO Takeo Fukui said Tuesday, one day before Honda's new Civic hybrid goes on sale in the USA.

The 2006 Civic hybrid is priced at $21,850, 15% more than the $19,060 for the top-of-the-line Civic with a five-speed automatic transmission. The entire Civic lineup has been redone for 2006. The 2005 Civic hybrid came at about the same premium over the top-of-the-line sedan with a four-speed automatic.

"We do still understand the price difference is rather significant for ordinary consumers," Fukui said. He said that automakers have to find a way to reduce the price difference by about half.To reduce the price difference further will require attacking costs in the key components that separate hybrids from regular cars — the battery, computer modules and electric motors. Reducing those costs will be easier as consumer demand grows, Fukui said.

He said he sees hybrids as just one solution to the move among consumers to save energy. The company also is developing vehicles powered by hydrogen and natural gas. Fukui isn't writing off conventionally powered cars either, saying he thinks there are still more gas savings that can be wrung out of them.

But last weekend, Ford engineers spent two days teaching 300 well-educated, well-connected technology lovers everything they can do to maximize the mileage on their gas-electric hybrid versions of the Escape SUV.

The move comes as more hybrid owners say they are unhappy with the fuel economy they get. Hybrid vehicles are powered by two motors, one gas and one electric, and can deliver much higher gas mileage than traditional engines. But about 60% of hybrid owners say they're not happy with how much gas their cars use, compared with 27.1% for all cars and trucks, according to CNW Marketing Research.

"The auto industry in general needs to do a better job listening to consumer sentiment, especially when there are areas of potential gaps between ad claims and product performance," he says. "For many consumers, there's been some unmistakable disappointment when hybrid cars aren't meeting the full promise staked out in the commercials."

Chuck Schifsky, a spokesman for Honda, admits that consumers get about 10% fewer miles per gallon than the sticker advertises, but he says that's what many people expect.Fuel economy numbers are calculated by the Environmental Protection Agency, which sticks a tube into the exhaust pipe, runs the vehicle on a treadmill, then figures how much carbon has been burned. That leads to mileage numbers that are often higher than what drivers obtain in the real world.

Wednesday, December 21, 2005

The US Department of Energy Discusses Peak Oil

In March 2004, the Dept of Energy published a little heralded document on the strategic importance of oil shale; roughly a quarter of the 45 page report is devoted to the subject of oil depletion and its likely consequences. Here are just a few excerpts:

World Discoveries did peak before the 1970's as shown in Figure 6. This figure also shows that no major new field discoveries have been made in decades. Presently, world oil reserves are being depleted three times as fast as they are being discovered...

The disparity between increasing production and declining reserves can have only one outcome: a practical supply limit will be reached and future supply to meet conventional oil demand will not be available. The question is when peak production will occur and what will be its ramifications.

Whether the peak occurs sooner or later is a matter of relative urgency...

In spite of projections for growth of non-OPEC supply, it appears that non-OPEC and no-Former Soviet Union countries hve peaking and are currently declining. The production cycle of countries...and the cumulative quantities produced reasonably follow Hubbert's model.

...Although there is no agreement about the date the world oil production will peak, forecasts presented by USGS geologist Thomas Magoon, and others expect the peak will occur between 2003 and 2020...What is notable about these predictions is that none extend beyond the year 2020. [pp. 7-8] The Nation must start now to respond to peaking global oil production to offset adverse economic and national security impacts. [p.26]

Source : The Party's Over / "Strategic Significance of America's Oil Shale Resource" , US Dept of Energy, March 2004

Why Biofuel Is Not The Solution to Our Energy Crisis

By promoting biodiesel as a substitute, we have missed the fact that it is worse than the fossil-fuel burning it replaces ...

...The idea that we can simply replace this fossil legacy - and the extraordinary power densities it gives us - with ambient energy is the stuff of science fiction. There is simply no substitute for cutting back. But substitutes are being sought everywhere. They are being promoted today at the climate talks in Montreal, by states - such as ours - that seek to avoid the hard decisions climate change demands. And at least one substitute is worse than the fossil-fuel burning it replaces.

The last time I drew attention to the hazards of making diesel fuel from vegetable oils, I received as much abuse as I have ever been sent for my stance on the Iraq war. The biodiesel missionaries, I discovered, are as vociferous in their denial as the executives of Exxon. I am now prepared to admit that my previous column was wrong. But they're not going to like it. I was wrong because I underestimated the fuel's destructive impact.

Before I go any further, I should make it clear that turning used chip fat into motor fuel is a good thing. The people slithering around all day in vats of filth are performing a service to society. But there is enough waste cooking oil in the UK to meet a 380th of our demand for road transport fuel. Beyond that, the trouble begins.

When I wrote about it last year, I thought that the biggest problem caused by biodiesel was that it set up a competition for land use. Arable land that would otherwise have been used to grow food would instead be used to grow fuel. But now I find that something even worse is happening. The biodiesel industry has accidentally invented the world's most carbon-intensive fuel.In promoting biodiesel - as the EU, the British and US governments and thousands of environmental campaigners do - you might imagine that you are creating a market for old chip fat, or rapeseed oil, or oil from algae grown in desert ponds. In reality you are creating a market for the most destructive crop on earth.

Last week, the chairman of Malaysia's federal land development authority announced that he was about to build a new biodiesel plant. His was the ninth such decision in four months. Four new refineries are being built in Peninsula Malaysia, one in Sarawak and two in Rotterdam. Two foreign consortiums - one German, one American - are setting up rival plants in Singapore. All of them will be making biodiesel from the same source: oil from palm trees.

"The demand for biodiesel," the Malaysian Star reports, "will come from the European Community ... This fresh demand ... would, at the very least, take up most of Malaysia's crude palm oil inventories." Why? Because it is cheaper than biodiesel made from any other crop.In September, Friends of the Earth published a report about the impact of palm oil production. "Between 1985 and 2000," it found, "the development of oil-palm plantations was responsible for an estimated 87 per cent of deforestation in Malaysia". In Sumatra and Borneo, some 4 million hectares of forest have been converted to palm farms. Now a further 6 million hectares are scheduled for clearance in Malaysia, and 16.5 million in Indonesia.

Almost all the remaining forest is at risk. Even the famous Tanjung Puting national park in Kalimantan is being ripped apart by oil planters. The orangutan is likely to become extinct in the wild. Sumatran rhinos, tigers, gibbons, tapirs, proboscis monkeys and thousands of other species could go the same way. Thousands of indigenous people have been evicted from their lands, and some 500 Indonesians have been tortured when they tried to resist. The forest fires which every so often smother the region in smog are mostly started by the palm growers. The entire region is being turned into a gigantic vegetable oil field.

Before oil palms, which are small and scrubby, are planted, vast forest trees, containing a much greater store of carbon, must be felled and burnt. Having used up the drier lands, the plantations are moving into the swamp forests, which grow on peat. When they've cut the trees, the planters drain the ground. As the peat dries it oxidises, releasing even more carbon dioxide than the trees. In terms of its impact on both the local and global environments, palm biodiesel is more destructive than crude oil from Nigeria.

The British government understands this. In a report published last month, when it announced that it would obey the EU and ensure that 5.75% of our transport fuel came from plants by 2010, it admitted "the main environmental risks are likely to be those concerning any large expansion in biofuel feedstock production, and particularly in Brazil (for sugar cane) and south-east Asia (for palm oil plantations)."

Tuesday, December 20, 2005

Peak Oil Debate: It's The End of Oil vs. Oil Is Here To Stay

World oil production is about to reach a peak and go into its final decline. For years, a handful of petroleum geologists, including me, have been predicting peak oil before 2007, but in an era of cheap oil, few people listened. Lately, several major oil companies seem to have got the message. One of Chevron's ads says the world is currently burning 2 bbl. of oil for every barrel of new oil discovered. ExxonMobil says 1987 was the last year that we found more oil worldwide than we burned. Shell reports that it will expand its Canadian oil-sands operations but elsewhere will focus on finding natural gas and not oil. It sounds as though Shell is kissing the oil business goodbye. M. King Hubbert, a geophysicist, correctly predicted in 1956 that oil production in the U.S. would peak in the early 1970s--the moment now known as "Hubbert's Peak." I believe world oil production is about to reach a similar peak.

Finding oil is like fishing in a pond. After several months, you notice that you are not catching as many fish. You could buy an expensive fly rod--new technology. Or you could decide that you have already caught most of the fish in the pond. Although increased oil prices (which ought to spur investment in oil production) and new technology help, they can't work magic. Recent discoveries are modest at best. The oil sands in Canada and Venezuela are extensive, but the Canadian operations to convert the deposits into transportable oil consume large amounts of natural gas, which is in short supply.

And technology cannot eliminate the difficulty Hubbert identified: the rate of producing oil depends on the fraction of oil that has not yet been produced. In other words, the fewer the fish in the pond, the harder it is to catch one. Peak production occurs at the halfway point.Based on the available data about new oil fields, there are 2,013 billion bbl. of total producible oil. Adding up the oil produced from the birth of the industry until today, we will reach the dreaded 1,006.5-billion-bbl. halfway mark late this year. For two years, I've been predicting that world oil production would reach its peak on Thanksgiving Day 2005. Today, with high oil prices pushing virtually all oil producers to pull up every barrel they can sweat out of the ground, I think it might happen even earlier.

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Peter Huber is the co-author, with Mark Mills, of The Bottomless Well The "Peak Oil" theory fits nicely on a cocktail napkin. Its curve looks like this: Colonel Edwin Drake starts pumping crude in Pennsylvania in 1859. We've been pumping faster and faster ever since. Sooner or later, on this finite planet of ours, it just has to run out. U.S. production peaked in the 1970s. Global production will soon be on the downside of the same dismal curve.

Nonsense. Technology and politics--not geology--determine how much we pump and what it costs.

America currently consumes about 7 billion bbl. of oil a year. When production in Persian Gulf fields was ramped up by 12 billion bbl. a year in the 1960s, global prices collapsed. That made it politically painless for the U.S. to ban almost all new drilling off the Florida and California coasts and then in much of Alaska. With oil, as with textiles, domestic production peaked because others began producing the same stuff cheaper, while we contrived to make our production more expensive. Today Alaska contains 18 billion bbl. of off-limits crude. We've embargoed at least an additional 30 billion bbl. beneath our coastal waters. And we could fuel many of our heavy trucks and delivery vehicles for a decade with the 20 billion bbl. worth of natural gas we've placed off limits in federal Rocky Mountain lands.

Outside our borders, Alberta's tar sands contain 180 billion bbl. recoverable with current technology, and Calgarians are pumping that oil today. A total of several trillion barrels of oil soak the sands of Canada and Venezuela alone--a century's worth at the current global rate of consumption. Then there are methane hydrates. The U.S contains some 30 trillion bbl. worth of those frozen hydrocarbons off the shores of Alaska, the continental coasts and under the Rockies. There's little doubt they too can be extracted economically. If we try, we'll certainly find cheap ways to transform North America's 1 trillion bbl. worth of coal into crude as well. General Patton's Third Army completed its roll across Europe on coal liquefied with German technology.

The price of oil has always fluctuated. In inflation-adjusted dollars, it was higher in the early '80s than it is today. Extraction technologies continue to improve much faster than supply horizons recede. We've got the right know-how and the right planet. What we lack is the political will.

Monday, December 19, 2005

October 2005 TIME Magazine Article: How To Kick The Oil Habit

...The frenzy to churn out hybrids and their technological cousins is so fierce that archrivals GM, DaimlerChrysler and BMW have teamed up to build a research and technical center in the Detroit suburbs. And Ford is so desperate to fill 200 open jobs in its hybrid program that it's competing with Toyota to hire engineers from the software and aerospace industries. The stakes are high: Ford and GM announced third-quarter losses of nearly $2 billion combined last week, thanks in part to plunging sales of SUVs.

It doesn't take a Ph.D. economist to figure out why that's happening--just a stop at the gas station, where prices are roughly 25% higher than they were a year ago, and where, despite a slight easing as the effects of hurricanes Katrina and Rita recede, they will probably go higher still before too long. Home heating oil is 50% higher than last year too, and natural gas will probably jump similarly. Those dramatic increases, Federal Reserve Chairman Alan Greenspan said in a speech last week, will create a significant drag on economic growth "from now on."The silver lining, said Greenspan, is that as oil gets more expensive, other energy sources and technologies that use less oil will become more competitive. And that's exactly what's happening. Says Daniel Yergin, chairman of Cambridge Energy Research Associates and author of The Prize, the 1991 best seller about the history of oil: "There's a lot of technological innovation kind of bubbling that really has captured the imagination and obsession of a lot of people." The question is, Are we moving fast enough?

As consumers, we need time to make adjustments--often very expensive ones--to the new technologies. Not everyone can afford to junk a two-year-old SUV to buy a new hybrid. Most people can't afford to abandon houses built in developments 100 miles out in the countryside when oil was cheap. And although energy and power companies are investing in new technologies, they can't create a massive new infrastructure overnight. Coal liquefaction, nuclear power, wind power--"all of these things need an enormous lead time," says Heinberg. The problem with the free market, in short, is that while it may sort things out over the long run, people have to cope in the short run. "Price signals," he adds, "come much too late, and we will endure a tremendous amount of economic and social hardship that could have been averted if we'd acted sooner. We could see the equivalent of the Great Depression, fueled by extreme oil and natural-gas prices."

Things would have been different if we had been pouring money into alternative energy for the past couple of decades, as we did in the aftermath of the oil shocks of the 1970s. Back then, despite the ribbing Jimmy Carter got for appearing on TV in a cardigan and calling for sacrifice, there was a clear sense of national emergency. That crisis receded, thanks in part to conservation and investments in energy efficiency and in part to the worldwide recession the oil shocks helped trigger. As a result, a barrel of oil costs 30% less today, in inflation-adjusted dollars, than it did at its peak in 1981. This is not the first time the world has run out of oil. Yergin says it's the fifth or sixth.

But this may be the real thing. Matthew Simmons, chairman of Simmons & Co. International, an energy-industry investment-banking firm, says, "This is a shortage where demand actually exceeds supply. The two shortages in the '70s were artificially induced." Back then, OPEC was powerful and disciplined enough for Middle East oil producers, angry about U.S. support of Israel and the Shah of Iran, to be able to simply turn down production. But now a confluence of trends has made oil shortages inevitable, not optional. One is the unexpectedly rapid expansion of India's and China's energy needs. Fadel Gheit, senior vice president for oil research at the New York City investment firm Oppenheimer & Co., says, "They created the tight market we're in."

Beyond that, the supply of crude is not unlimited. Opening the Arctic National Wildlife Refuge or the coast of Florida for drilling, which congressional Republicans have been pushing for, is a relatively short-term fix. And the more oil that is removed, the more expensive the cost of extracting the remaining oil becomes. At some point--possibly as early as 2010--production will therefore reach a peak, though not necessarily a sharp one, and then gradually start to decline. "The problem," says Simmons, "is that the global economy and the U.S. economy are structured on the assumption that the oil supply will only increase."

The upheaval could be alleviated significantly if the government had a long-range policy for moving beyond oil. . Republican Representative Richard Pombo of California, chairman of the Resources Committee, says, "There is already an incentive to develop new technology. You just have to send a real clear signal that the Federal Government wants to." But a wholesale push to change our highway culture is unlikely. European countries decided long ago that it paid off to interfere in the free market by discouraging oil consumption and subsidizing mass transit, but that's not the American way.

The one thing that will probably cushion the blow of this new and permanent energy crisis is something old, with an air about it of discomfort and duty: conservation. There's nothing particularly sexy or chic about consolidating shopping trips, carpooling, turning the thermostat down in winter and up in summer, or biking to the office and back, but it does work. In the early '80s, in the midst of soaring oil prices, we doubled the average efficiency of cars, furnaces and insulation. Katrina and Rita might not have pushed us into another energy-crisis mind-set yet. With the inevitable price jolts to come, though, we're heading that way soon enough.

Source: (TIME Magazine 10/05) - Leave your email address if you would like a full copy of the article

Honda Plans To Start Mass Producing Solar Cells in 2007

Japan's third-biggest automaker said in a statement it would build a new factory for solar cells on the site of a car plant in Kumamoto prefecture, on the southwestern Japanese island of Kyushu. The company aims to generate annual sales of 5 billion to 8 billion yen ($40 million to $70 million) from solar cells once the factory's output reaches full annual capacity of 27.5 megawatts, enough to power about 8,000 households.

Honda will be competing with major solar cell manufacturers such as Kyocera Corp., Sharp Corp. and Mitsubishi Electric Corp. A Honda spokeswoman did not say when the factory would hit full capacity and declined to disclose the size of the investment, which the Nihon Keizai business daily estimated would be just short of 10 billion yen.

Honda said its solar cells would be composed of non-silicon compound materials, consuming half as much energy and generating 50 percent less carbon dioxide during production when compared with conventional solar cells made from silicon. The company aims to sell the solar cells for both residential and industrial use. It will initially target the Japanese market. Prior to mass production, Honda plans to manufacture and sell solar cells in a limited area in Japan from late 2006.

Sunday, December 18, 2005

Goldman's Murti Says: `Peak Oil' Risks Sending Prices Above $105

Dec. 19 (Bloomberg) -- Goldman Sachs Group Inc. analyst Arjun Murti, who roiled oil markets in March by saying crude may reach $105 a barrel, now says that may be conservative if the ``peak oil'' theory is right and world supplies are running out.

The belief that the world's oil supply is close to an irreversible drop is no longer ``on the fringes'' of the market, said a research report by New York-based Murti, who forecasts oil of $50 to $105 a barrel until 2009. UBS AG analyst James Hubbard, a former oil engineer at Schlumberger Ltd., said an inevitable decline in supply will start sooner and be worse than expected unless investment increases for many years.

A jump above $105 a barrel ``is possible if we don't invest the right amount of money,'' Hubbard said in an interview in London. ``There will be a peak in production earlier than expected, and that post-peak decline will be more dramatic than currently assumed unless there is a sustained increase in investment in oil and gas production, greater consumer efficiency and alternative energy sources.''

While Saudi Arabian Oil Minister Ali al-Naimi and Exxon Mobil Corp. President Rex Tillerson say oil supplies will last for decades, energy traders are increasingly debating the amount of available crude. Oil's two-year jump to about $60 a barrel came as rising demand from China surprised suppliers, who had failed to spend on new pipelines, rigs and refineries.Investors who back the peak oil theory, such as Boone Pickens, a Dallas hedge fund manager and former oil executive, have fueled the price rally of the past two years, during which oil almost doubled, to reach a record $70.85 in August. Prices ended last week at $58.06 in New York.

The peak oil theory is based partly on the work of M. King Hubbert, a former Royal Dutch Shell Plc geophysicist who accurately predicted in 1949 that U.S. domestic onshore oil production would plateau by about 1970. Chevron Corp., the second-largest U.S.-based oil company, in its advertising declares, ``One thing is clear: The era of easy oil is over.'' Estimates vary on how much oil remains to be produced and when supplies will peak.

Tillerson in September told the World Petroleum Congress in Johannesburg that a U.S. Geological Survey estimate of 2 trillion barrels of conventional oil reserves still to be recovered is conservative, with the range of possibility as high as 7 trillion barrels. Less than 1 trillion have been pumped already.

Goldman's Murti in March skirted the peak oil debate. In a report last week, the analyst said it's something to monitor. ``It is possible that the peak oil theorists are correct,'' he wrote. ``If so, we think that the duration and magnitude of energy commodity price increases would be likely to far exceed what we are contemplating.'' He couldn't be reached for comment.

The 1973 OPEC Oil Embargo: A Preview of Peak Oil

I've found that critics of peak oil seem to laugh it off as some outlandish theory or a scare tactic to make everyone believe we are going to run out of oil next year. But Peak oil isn't about running out of oil, it's about the end of "cheap" oil. Many of the luxuries that we enjoy today, expected growth in the economy and stock market, and our basic American way of life are all supported by the underlying platform of access to cheap oil and energy. Oil does not have to run out before America feels the effects of higher energy prices -- that's the whole point -- we're going to feel the effects at the peak, when global demand outstrips oil supplies.

One of the first things I've learned when I started researching peakoil, is that spikes in high oil prices have indeed happened before, and due to my birthdate of March 30, 1980, I never experienced the oil shocks of 70's firsthand. I never knew a time where the United States and the Saudis didn't "play nice" as they seem to do now. The most important facts for me personally, regarding the 1973 oil embargo is that it was based on geopolitical events, while global peak oil is based on actual geological limitations, meaning that no nation while be able to make the difference between demand and supply -- think of peak oil as a permanent oil embargo. Also the increase in prices of oil barrels were relatively small and the effects on the economy were devastating -- it's scary to imagine what will happen to the wold ecomony after a gloal peak occurs.

Background:

In 1973, Saudi Arabia had tremendous surplus capacity. The country had more oil to start with than the United states had had a hundred years earlier. By the 1970's as America passed its all-time production peak, Saudi Arabia oil production was just entering its robust phase. Production was run by Aramco, a join venture mong Exxon, Texaco, Mobil, and Chevron (previously known as Standard Oil of California).

The 1973 Yom Kippur war was the precipitating incident of the OPEC ("Organization of Petroleum Exporting Countries")embargo. On October 6th, Egyptian and Syrian forces caught the Israeli military off-guard on the most solemn Jewish holiday, when many soldiers were home with their families. Because the Arab-Israeli dispute was commonly viewed as yet another cold war proxy battle, the US and its allies naturally lined up behind Israel against the Soviet sponsored agressors. Egypt's President Anwar Sadat implored the Saudi's and other Muslim states to use the "oil weapon" against Israel's allies.

On October 12th, the Saudi-led OPEN demanded of the various Western companies doing business in the Middle East, including Aramco, a 100% increase in the posted price of the cartel's oil. The companies stalled for time. On October 16, the Persian Gulf region OPEC members broke off negotiations with Western oil companies and announced they would set prices themselves. On October 17th, the Israeli's gained the upper hand on the battlefield , thanks in large part to aggresive American resupply efforts, and began to push the Egyptians back. The same day, Arab oil ministers announced an oil embargo on the United States, while increasing prices by 70% western Europe. On October 19th, President Richard M. Nixon announced a military aid package for Israel and the following day, Saudi Arabia retaliated by announcing a total cutoff of oil exports to America.

The embargo never achieved a shutoff of OPEn oil imports to the U.S. All but 5% of needed supply found its way to America by redirecting allocations to other nations. However, the base price of a barrel of oil did eventually more than quadruple by the time the embargo was called off in March 1974. The price rise alone staggered the West and Japan.

Effects of the Embargo

Lines of cars formed at the gas stations

Posted prices changed hourly in some places as station owners took advantage of a panic situation

Fights broke out among motorists waiting in line

Odd and even license plate numbers were used to assign gas-buying privileges on certain days of the week

The industry's own national allocation system failed and some parts of the United States got plenty of gasoline while others got none at all

President Nixon proposed an extension of daylight savings time and a total ban on the sale of gasoline on Sundays

Gas ration stamps were printed by never used

Prices of food and manufactured goods shot up - the entire American workforce suffered, in effect, a substantial cut in pay

The stock market dropped 15% in a month, and a year later it would be down 45% from its pre-embargo high

The Big Three auto manufacturers selling gas guzzling oversized fleets suffered plummeting sales and lost market share to European and Japanese auto manufacturers

Price inflation and economic stagnatation led industrial nations into deep recessions, the worst since the 1930's

President Jimmy Carter attempted to awaken the American public to the idea that the energy crisis was a more or less permanent condition relfecting the real drawdown of the nationa's numer one nonrenewable resource. He attempted to fashion a coherent national energy policy , passed tax and rate incentives for hydroelectric development, restarted Nixon's "Project Independence" to develop synthetic hydrocarbon and alternative fuels. In April 1977, Carter declared the nation's energy predicament was the "moral equivalent of war." He also installed solar water heaters on the White House roof and a wood stove in the White House, which were both subsequently removed by Ronald Reagan.

THE END OF SUBURBIA: Oil Depletion and the Collapse of The American Dream

So this Christmas, I tossed out the traditional notion of consuming till you can't possibly consume anymore and bought fewer and more non-traditional items for my friends and family members. For my college friends, I decided to give the gift that keeps on giving, Heinberg's The Party's Over (see previous post) and the "End of Suburbia" dvd directed by Gregory Greene and produced by Barry Silverthorn.

Since World War II North Americans have invested much of their newfound wealth in suburbia. It has promised a sense of space, affordability, family life and upward mobility. As the population of suburban sprawl has exploded in the past 50 years, so too has the suburban way of life become embedded in the American consciousness. Suburbia, and all it promises, has become the American Dream.

But as we enter the 21st century, serious questions are beginning to emerge about the sustainability of this way of life. With brutal honesty and a touch of irony, The End of Suburbia explores the American Way of Life and its prospects as the planet approaches a critical era, as global demand for fossil fuels begins to outstrip supply. World Oil Peak and the inevitable decline of fossil fuels are upon us now, some scientists and policy makers argue in this documentary.

The consequences of inaction in the face of this global crisis are enormous. What does Oil Peak mean for North America? As energy prices skyrocket in the coming years, how will the populations of suburbia react to the collapse of their dream? Are today's suburbs destined to become the slums of tomorrow? And what can be done NOW, individually and collectively, to avoid The End of Suburbia ?

I found about of this DVD on some random website and attended a screening in San Francisco hosted by the Green Party, which included a discussion afterwards. About 45 people showed up to the screening at the Bazaar Cafe which I thought was very exciting. You can purchase the dvd on the End of Suburbia website via PayPal or you can rent it at Netflix. If, after seeing it, you want to host your own screening, you're welcome to do so without permission as long as the event is non-profit. A modest admission charge to offset costs is permitted.

Saturday, December 17, 2005

"Peak Oil Is Not a Theory" - Kjell Aleklett

Excerpt from testimony of Professor Kjell Aleklett, Department of Radiation Sciences Uppsala University in Uppsala, Sweden:

"The United States, the wealthiest country in the world, has 5 percent of the global population and uses 25 percent of the oil. It is time to discuss what the United States should do to cut consumption—and rapidly. In February 2005 a report for the U.S. Department of Energy, DoE, (Peaking of World Oil Production: Impacts, Mitigation, & Risk Management) argued that "world oil peaking represents a problem like none other. The political, economic, and social stakes are enormous. Prudent risk management demands urgent attention and early action." Any serious program launched today will take 20 years to complete. "

"What about oil sands? The enormous reserves of oil sands in Canada are often mentioned as a lifesaver for the world. The report to DoE in February inspired us to undertake a “Crash Program Scenario Study for the Canadian Oil Sand Industry” (B. Söderbergh, F. Robelius, and K. Aleklett, to be published). In the study we found that Canada must very soon decide if its natural gas should be exported to USA or instead used for the oil sands industry."

"Animals that face food shortages have a hard time adjusting and usually their populations decline. Some believe that we as human beings will face a similar situation. I can't accept that. As human beings we can think and come up with ideas, and I believe we can find solutions. The road will be bumpy and many people will be hurt, but when we arrive at the end of this road, it must be as a sustainable society. It will not be possible to travel this road without using part of the existing stocks of fossil fuels and, for industrial countries, nuclear energy as well, but we can do it in a manner that will have minimal impact on the planet. The problem is that we should have started at least 10 years ago. We must act now, as otherwise the bumps and holes in the road might be devastating."

"Peak Oil Is Not a Theory" - Robert Hirsch

Excerpts from testimony of Robert L. Hirsch. Dr. Hirsch is a Senior Energy Program Advisor at SAIC. His past positions include Senior Energy Analyst at RAND; Executive Advisor to the President of Advanced Power Technologies, Inc.; Vice President, Washington Office, Electric Power Research Institute; Vice President and Manager of Research, ARCO Oil and Gas Company; Chief Executive Officer of ARCO Power Technologies, a company that he founded. (Source: http://www.d-n-i.net/fcs/hirsch_bio.htm)

"The era of plentiful, low-cost petroleum is approaching an end. A recent analysis for the DOE focused on what might be done to mitigate the peaking of world oil production. It became abundantly clear that effective mitigation will be dependent on the implementation of mega-projects and mega-changes at the maximum possible rate. A scenario analysis was performed, based on crash program implementation worldwide – the fastest humanly possible. The timing of oil peaking was left open because of the considerable differences of opinion among experts. The results were startling: Unless a mitigation crash program is started 20 years before peaking occurs, the economic consequences will be dire. "

"World oil demand is forecast to grow 50 percent by 2025.1 To meet that demand, ever-larger volumes of oil will have to be produced. Since oil production from individual oil fields grows to a peak and then declines, new fields must be continually discovered and brought into production to compensate for the depletion of older fields and to meet increasing world demand. If large quantities of new oil are not discovered and brought into production somewhere in the world, then world oil production will no longer satisfy demand. Peaking means that the rate of world oil production cannot increase; it does not mean that production will suddenly stop because there will still be large reserves remaining. "

"Until recently, OPEC assured the world that oil supply would continue to be plentiful, but that position is changing. Some in OPEC are now warning that oil supply will not be adequate to satisfy world demand in 10-15 years.2 Dr. Sadad al-Husseini, retired senior Saudi Aramco oil exploration executive, is on record as saying that the world is heading for an oil shortage; in his words "a whole new Saudi Arabia (will have to be found and developed) every couple of years'' to satisfy current demand forecasts. So the messages from the world’s "breadbasket of oil" are moving from confident assurances to warnings of approaching shortage. "

"Chinese officials have forecast the peaking of world oil production around the year 2012. As this committee knows, China has been making huge oil investments and procurement deals all over the world in recent years. They attempted to buy Unocal above market price. Indeed they are paying premium prices in many countries in order to secure future oil supplies. "

"Peak Oil Is Not a Theory" - Tom Udall

Excerpts from testimony by House Representative Tom Udall, Democrat - New Mexico:

"The theory of Peak Oil states that, like any finite resource, oil will reach a peak in production after which supply will steadily and sharply decrease. In 1956, Shell Oil geologist M. King Hubbert predicted that oil production in the contiguous United States would peak in about 1970 and be followed by a sharp decline. At the time, many dismissed his predictions as false, but history shows they were remarkably accurate. A growing number of geologists, economists and politicians now agree that the peak in the world’s oil production is imminent; predicted to occur within one or two decades. Some disagree with this prediction, calling it a doomsday scenario and say that technological advances will buy us more time before we reach peak production. Theirs, however, is not the consensus view and even they agree that a peak in the world’s oil production is inevitable. "

"Some say that market forces will take care of the peak oil problem. They argue that as we approach or pass the peak of production, the price of oil will increase and alternatives will become more competitive. Following this, consumers will act to replace our need for non-petroleum energy resources. This philosophy is partly true. However, the main problem with this argument is that current U.S. oil prices do not accurately reflect the full social costs of oil consumption. Currently, in the United States, federal and state taxes add up to about 40 cents per gallon of gasoline. A World Resources Institute analysis found that fuel-related costs not covered by drivers are at least twice that much. The current price of oil does not include the full cost of road maintenance, health and environmental costs attributed to air pollution, the financial risks of global warming from increasing carbon dioxide emissions or the threats to national security from importing oil. Because the price of oil is artificially low, significant private investment in alternative technologies that provide a long-term payback does not exist. Until oil and its alternatives compete in a fair market, new technologies will not thrive. "

"Peak Oil Is Not a Theory" - Roscoe Bartlett

"Just as Hubbert was right about the United States, peak oil has occurred in other countries and global peak oil will happen. Oil production is declining in 33 of the world’s 48 largest oil-producing countries. The Associated Press just reported that Texas oil and natural gas production declined five percent in the first nine months of 2005. Global “Peak Oil” has not yet occurred, but will mark the maximum annual world production of this source of cheap energy. It has utterly transformed America and the world in the past 100 years."

"President Bush has committed the Administration to reducing America’s energy insecurity. I met with the President at the White House on June 29, 2005 and was impressed by his understanding of the need for our government to act now to prepare for global “Peak Oil”. On October 5, 2005, Department of Energy Secretary Samuel Bodman requested the National Petroleum Council to study “Peak Oil” and the oil and natural gas industry's ability to produce enough oil and natural gas at prices that would not cripple the American economy. Our country’s leadership is slowly becoming aware of “Peak Oil”. However, it is my hope because of hearings like this and the testimonies given by some of our most prominent figures, our country’s leadership will start to see the urgency in addressing this issue, and make it the centerpiece of their agenda."

"...For example, in testimony before the U.S. Senate Committee on Foreign Relations on November 16, former CIA Director James Woolsey discussed “seven reasons why dependence on petroleum and its products for the lion’s share of the world’s transportation fuel creates special dangers in our time.” 1. Transportation infrastructure is dependent upon oil 2. The Middle East will continue to be the low-cost and dominant petroleum producer. 3. Petroleum infrastructure is highly vulnerable to terrorist and other attacks. 4. The possibility is increasing of embargoes or supply disruptions under regimes that could come to power in the Greater Middle East. 5. Oil revenue transfers fund terrorism. 6. Current account deficits for a number of countries create risks ranging from major world economic disruption to deepening poverty that could be reduced by reducing oil imports. 7. Oil used for transportation produce greenhouse gases that increase the risk of climate change."

The Caucus, with additional co-sponsors, introduced House Resolution 507 on October 24, 2005:

RESOLUTION Expressing the sense of the House of Representatives that the United States, in collaboration with other international allies, should establish an energy project with the magnitude, creativity, and sense of urgency that was incorporated in the `Man on the Moon' project to address the inevitable challenges of `Peak Oil'.

Whereas the United States has only 2 percent of the world's oil reserves; Whereas the United States produces 8 percent of the world's oil and consumes 25 percent of the world's oil, of which nearly 60 percent is imported from foreign countries;

Whereas developing countries around the world are increasing their demand for oil consumption at rapid rates; for example, the average consumption increase, by percentage, from 2003 to 2004 for the countries of Belarus, Kuwait, China, and Singapore was 15.9 percent;Whereas the United States consumed more than 937,000,000 tonnes of oil in 2004, and that figure could rise in 2005 given previous projection trends;

Whereas, as fossil energy resources become depleted, new, highly efficient technologies will be required in order to sustainably tap replenishable resources;

Whereas the Shell Oil scientist M. King Hubbert accurately predicted that United States domestic production would peak in 1970, and a growing number of petroleum experts believe that the peak in the world's oil production (Peak Oil) is likely to occur in the next decade while demand continues to rise;

Whereas North American natural gas production has also peaked; Whereas the United States is now the world's largest importer of both petroleum and natural gas;

Whereas the population of the United States is increasing by nearly 30,000,000 persons every decade;

Whereas the energy density in one barrel of oil is the equivalent of eight people working full time for one year;

Whereas affordable supplies of petroleum and natural gas are critical to national security and energy prosperity; and Whereas the United States has approximately 250 years of coal at current consumption rates, but if that consumption rate is increased by 2 percent per year, coal reserves are reduced to 75 years:

Now, therefore, be it Resolved, That it is the sense of the House of Representatives that-- (1) in order to keep energy costs affordable, curb our environmental impact, and safeguard economic prosperity, including our trade deficit, the United States must move rapidly to increase the productivity with which it uses fossil fuel, and to accelerate the transition to renewable fuels and a sustainable, clean energy economy; and (2) the United States, in collaboration with other international allies, should establish an energy project with the magnitude, creativity, and sense of urgency of the `Man on the Moon' project to develop a comprehensive plan to address the challenges presented by Peak Oil.

Thursday, December 15, 2005

Kazakhstan Opens Oil Pipeline to China

The demand for oil in China is expected to significantly increase in the coming years due to their rising population and increased industrialization of their society. Looks like China is making another attempt to secure future oil:

Thursday 15 December 2005 - A new oil pipeline to carry oil to China from Kazakhstan has formally been inaugurated, brightening Beijing's prospects of reduced dependence on Middle Eastern crude.

With the push of a button, Nursultan Nazarbayev, the president of Kazakhstan, put the $806 million pipeline into service on Thursday from the control centre of state-run KazTransOil in the Kazakh capital of Astana. "This is an event of the utmost importance for economic and commercial relations between China and Kazakhstan," President Nazarbayev said.

The 1000km pipeline linking Atasu in central Kazakhstan to Alashanku in western China will now start to fill with Kazakh oil from the central Kumkol field. The route covers some of the world's most inhospitable territory, with extreme temperature ranges and earthquake-prone zones.

But the pipeline, jointly developed by the China National Petroleum Corporation (CNPC) and the Kazakh state energy company Kazmunaigaz, is a first milestone in a more ambitious project: to link Chinese consumers to the far bigger oil fields of the Caspian Sea. Growing demand has forced China to look for new energy sources Kazakhstan's authorities say the extension should be complete by 2011, with capacity also doubled. The total length would then be some 3000km. Chinese strategy Oil analysts said the new pipeline was an important step in Beijing's effort to reduce its reliance on Middle East supplies at a time when the country's energy needs are soaring.

"The new Kazakh pipeline is small but it signals a real Chinese interest in trying to move away from Middle East oil," said Kuen Woon Paik, a researcher at Chatham House, a London think tank. Beijing also is negotiating with Russia over the construction of a proposed pipeline to deliver Siberian oil. That line, to be completed as early as 2008, would carry about 380,000 barrels per day. "Both the Kazakh and Russian lines will help China get away from dependence on Middle East oil," said Gavin Thompson, who works in Beijing for the British oil consulting firm Wood Mackenzie. The new pipeline is also a step towards breaking Kazakh dependence on its former master Russia for export routes. Deliveries are expected to start only in mid-2006, with an initial annual capacity of 10 million tonnes.

Big Peak Oil vs Little Peak Oil

Marion King Hubbert predicted in 1956, based on his study of the lifetime production profile of typical oil reservoirs predicted the peak of crude oil production would occur between 1966 and 1972. The actual peak in US oil production occurred in 1970. Since then the oil production within the United States has been in decline and we have been importing more and more oil each year to meeting our growing consumption demands. The problem with oil reserves peaking is that they go into a sharp decline in production after their peak and the oil remaining in the reserve is harder to get, of a lower quality, and therefore more expensive to produce.

But what about other oil producing countries? Have they peaked as well?

The following countries represent 94% of the world oil resources. Let's take a peek at their "peak" dates shall we?

Syriana - What is the Price of Oil?

So I have been anticipating this film coming out for quite awhile, and that's saying a lot for me personally because I've been generally dissapointed with what Hollywood has been dishing out these days. I saw it the day after it came out, only because I was stranded in a snowstorm in Boston, and I have to say it's one of the most important films made in quite awhile. I can't say I loved it - although the acting was very good and liked the interwoven plots and directing style...I can't say I understood it all - as I had to ask my boyfriend, who was a history major, to explain quite a few parts to me, BUT I can say that it was an important movie because it really gives people a reality check as to price our society is paying for oil and gives us a preview of the price we'll be willing to pay in the future.

Before watching the movie, I watched a special on A&E called Movie Real: Syriana, where the director, actors, and experts discuss the issues that movie is trying to address. I think that this special should have been a required pre-requisite before seeing the film because I'm skeptical that the average American would walk away from the movie, and come anywhere close to "getting it." I wouldn't have understand the reference to "elephant" fields, without reading some recent articles. I also wouldn't have understood some of the geographical location references and so on and so forth. My friend in Hawaii actually said that a few people left during the middle of the movie, and it's not a bad film, I can only assume it went over their heads, which is unfortunate. (Nobody in my San Francisco movie theatre walked out...score!)

Anyways, in the A&E Special Clooney says his main point of the film was to get people talking about the issues the film explored and to start asking the tougher questions. I guess I would have preferred a movie that met the American people where the currently at, only because the movie would have appealed to a wider audience, but then again maybe the responsibility is on the American people proactively obtain this type of information on their own. Proactiveness? In America? Imagine that.

Our dependence on oil is bad news for our environment, economy, and national security, and it creates dangerous flashpoints in politically unstable regions around the globe. We already have the technology to start fixing the problem today with hybrid cars and renewable energies. These solutions reduce our oil demand, save money, and create new high-tech business opportunities. The energy decisions you make every day can have an impact.

Wednesday, December 14, 2005

Peak Oil Suggested Reading: The Party's Over

A really good source of peak oil knowledge is Richard Heinberg (www.museletter.com) . I just finished his book The Party's Over: Oil, War, and Fate of Industrial Societies, and it was great informative reading, if not a bit depressing, but this is peak oil we're talking about kids!

The book's goal is to show:

1. The complete and utter dependency of modern industrial societies on fossil fuel energy resources as well as the inability of alternatives to fully substitute for the concentrated, convenient energy source that fossil fuels provide

2. The vulnerability of industrial societies to economic and political disruption as a result of even minor reductions in energy resource availability.

3. The inevitability of fossil fuel depletion

4. The immedicacy of a peak in fossil fuel depletion, regardles of how many wild lands are explored or how many wells are drilled.

5. The role of oil in US foreign policy, Islamic terrorism, and the geopolitics of the 21st century; and

6. The necessity of responding to the coming oil productio peak cooperatively, with compassion and intelligence, in a way that minimizes human suffering and enables future geenerations to develop sustainable, materially modest societies that affirm the best qualities of human nature.

Mr. Heinberg gives an overview on how he came to this particular worldview by acknowledging four sets of voices, each with contradicting opinions:

Voice # 1: Conventional free-market economists who view energy as a merely one priced commodity among many. They have a cornucopian view of our energy future and if an energy crisis appears, it will be a temporary one caused by "market imperfections" resulting from government regulation. Solutions will come from the market's natural response to price signals if those signals do not get obscured by price caps and other forms of regulatory interference.

Voice # 2: Environmental activists who are worried about the buildup of greenhouse gases in the atmosphere and about hydrocarbon based pollution. For the most part their unconcerned with high energy prices and petroleum resource depletion, which they assume will occur to late to prevent serious environmental damage. Their message is to conserve and switch to renewables for the sake of the environment and our children's/grandchildren's welfare.

Voice #3: An informal group of retired and independent pretroleum geologists who have nothing but contempt for economists who by reducing all resources to dollar prices effectively obscure real and important phsycial distinctions. Their messsage is that society musc engage in a crash program of truly radical conservation if we are to avoid economic and humanitarian catastrophe as industrialism comes to its inevitable end.

Voice #4: Politicians who set energy policy, who tend to believe the economists' message, as no politician wants to be the bearer of bad news that our energy guzzling way of life is waning. When office holders are forced to acknowledge the reality of an impending energy crisis, they naturally tend to propose solutions appropriate to their constituencies and they predicatbly tend to blame on their political opponents whatever symptoms of the crisis cannot be ignored.

Heinberg tends to believe Voice #3, as they are probably dispensing the most useful, factual information and their view is long-range and based on physical reality.

Petroleum Products We Use Every Day

So if the picture hasn't become clear in the past couple of posts, I hope the following list of petroleum based products, drives the point home. I tried not to repeat items mentioned in the post describing John D.'s rude awakening, but there might be some overlap.

We use oil for almost everything we've taken for granted as part of everyday life. When oil becomes expensive and scarce, I doubt -- strike that -- we will not be able to continue on as a "throwaway" society, and our standard of living will suffer.

This isn't an issue of driving less or buying a hybrid vehicle! This is about the neccesity of downscaling our society and completely rethinking how we live, all brought to us courtesy of the end of cheap oil.

9 Out of 10 Barrels of Oil Are Used for Petroleum Fuel

Fuel products account for nearly 9 out of every 10 barrels (90%) of petroleum used in the United States. Limited oil supplies will be devasting to our economy and way of life -- Here's a rough /technical breakdown on how we use oil in America, according to a 1999 report put out by the Energy Information Administration (http://www.eia.doe.gov/):

Liquefied Petroleum Gases (LPG’s) (9%) – Serves as inputs for petroleum for petrochemicalproduction processes; Fuel for domestic heating and cooking, farming operations, and as an alternative to gasoline for use in internal combustion engines.

So What Does Peak Oil Have to Do With Me?

One of my first responses when researching peak oil, was one of denial. I downplayed my wasteful habits and figured I'd just make an effort to drive less and even invest in a hybrid vehicle for my next car purchase. Ummm...well, it's not that simple. Here's an excerpt from a good article that will hopefully get people thinking more about how petroleum is an extremely intricate part of our everyday lives:

To truly grasp how much petroleum impacts our lives, let’s put John D. in his driveway, dressed for work and standing next to his dear Porsche 911 Turbo.

John is wearing a nice suit and tie. Unfortunately, the suit is wool and polyester, the buttons are plastic as well as the zipper in the pants. Remove 25% of the material from his suit, all elastic and plastic stays, the buttons and the zipper. Why? Polyester, dacron, rayon, orlon – these are all petroleum based, man made fibers. All plastic is petroleum based, as is elastic. Better get rid of the waistband on his under shorts too while we are at it. Abruptly, our friend John is rather chilly, as what is left of his suit, pants, shirt and under shorts have fallen around his ankles.

John wears glasses with polycarbonate lenses when he reads, and plastic contacts when he is doing anything active. These also require petroleum for manufacture, and will have to be replaced with real glasses made from glass. Oops – the frames are unbreakable plastic – those will need to go as well. While we are subtracting, let’s toss out his credit cards (plastic), the heels from his shoes (polyethylene-based rubber), and his all-weather watchband (faux-leather that is actually plastic). And we better get rid of that driver’s license too – the lamination is made from petroleum, as is the ink. And let’s not forget the ink that his money is printed with – yes, the ink which most currency is printed with is also a petroleum based product. As John stands with what used to be a suit around his ankles, the only thing he has left that hasn’t disappeared or fallen to the ground is his cotton undershirt, and he is completely broke.

Embarrassed, John spins his nakedness around and reaches for the door of his car…..and now we can do an even more rapid deconstruction. Empty the gas tank of gas, remove all the oil from the crankcase of the engine, remove all the transmission fluid, dump the heavy weight gear oil from the differential, and bleed all the fluid from the brake system. Each of these fluids and lubricants is derived 100% from oil.

Oh! Let’s not forget to remove every smidgeon of grease from every wheel bearing, every U-joint and any other petroleum lubricant from the vehicle. Now we can move forward a bit more, and peel the paint off. Automotive paint uses petroleum (tolulene, xylene, etc.) as base material. We can remove the tires, the rubber bushings from underneath every piece of the car, the steering wheel cover, the dash cover, the seat covers, the carpet, the seat padding and any foam insulation, the dashboard and all the A/C vents, and each and every rubber gasket. The jute-based carpet padding can remain – it is all natural. The safety glass (remember that layer of plastic in safety glass?), the seat padding, all the undercoating, all the CD’s, and the radio can go too. But the radio too, you might ask?

Every single wire in every single electronic device relies on petroleum-based coating as insulation around the wiring. Remove this insulation, and all you have is a mass of silicon and copper wires shorting out in a pile……so not only the radio, but every single wire in the car is coated by a petroleum product!We are left with a pile of iron and copper, resting on a bed of jute padding. But if we just think a little more, we can reduce these as well. How is steel made? Iron ore is mined in Australia or other countries using massive vehicles BUILT and FUELED by petroleum products. The raw iron ore is then shipped by trains or trucks (BUILT and FUELED by petroleum products) to a ship (BUILT and FUELED by petroleum), which transports them to another country to be made into steel.

Once it arrives, the ore is unloaded by a bulk belt conveyer (BUILT and FUELED by petroleum), shipped from the dock to the ore processing mill by trucks (BUILT and FUELED by petroleum) where it is placed into a very hot furnace (which is fired by natural gas, a petroleum product) and smelted into pig iron. This pig iron is then shipped again by train or truck (BUILT and FUELED by petroleum) to a steel plant. Here, it is again melted in a special electric furnace, (electricity, generated by clean natural gas, a petroleum product) and made into various steel products which are then shipped to various destinations (using petroleum as FUEL).If we truly want to account for the petroleum factor, steel cannot be made the way it is today. Aluminum is even more energy intensive, and that leaves us with a wad of copper wire sitting in the driveway, resting on our jute ‘rug’. John, now completely discombobulated, runs for the door of his home.

Unfortunately, the steel hinges and doorknobs are missing. When he touches the door it falls inward; his carpeting has disappeared, and the house is really hot and dark. It seems air conditioners are made from aluminum and steel, as are most appliances. Johns’ local Power Company uses clean, non-polluting natural gas to generate their electricity, so let’s kill all the power to the house. He is relieved to see his toilet still sitting there, but everything electronic and electrical has become a tangled mass of copper wires and circuit boards.Water is spraying out of the ground, because John’s house was plumbed with POLY VINYL CHLORIDE (PVC) pipe, which is a 100% petroleum product. His furniture has turned into skeleton-like wooden frames, as the materials and padding used to make couches and chairs are long lasting, man-made fibers derived from petroleum. Rancid goop is oozing out of every cabinet in the kitchen, and everything that was in his refrigerator is slumped into a pile only a garbologist could be proud of. It seems that 90% of the packaging materials we use today are made from (you guessed it) petroleum.

His fresh vegetables and many of his canned goods are gone. John suddenly remembers reading an article about fertilizer and pesticide shortages. It seems these are also made almost exclusively from petroleum, and without them, modern mass-farming techniques are not viable. Crop yields are down, and the cost of trucking lettuce from California and Washington to other places is just too high.

And if you think this hurts, imagine everything you ever bought from a department store vanishing – because they were ALL IMPORTED from cheap-labor “elsewheres” using petroleum as fuel. Forget all plastic – it is 100% petroleum.

Toss out computers and electronics as we know them today – we don’t have the insulating materials to build them without petroleum. We don’t have the massive electrical capacity to build anything really high tech – the cost of oil or natural gas to fuel the power grid has become too high.

Space travel? Forget it – the hydrogen used to power the shuttle is derived from petroleum, and it will not fly without the electronics and guidance system. And all the aluminum and titanium and other special alloys each require extremely energy intensive manufacturing processes, which use too much electricity that comes from gas and oil fired power plants.